PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2009, 2008 AND 2007
Expressed in millions of Rupiah, unless otherwise stated
Appendix 5140 56. RISK MANAGEMENT continued
Market and Liquidity Risk continued
d. Market Risk Management continued
In accordance with Bank Indonesia regulations, the Bank has considered market risk using Standard Model in allocating its capital. The minimum capital adequacy required which has
considered market risk as at 31 December 2009 was Rp127,935, therefore the CAR which has considered market risk and credit risk is 15.43 Note 51.
The Bank continuously reviews and improves the implementation of market risk management with the regulation requirements, up to date condition and best practice.
e. Foreign Exchange Risk Management
The Bank measures and manages the structural foreign exchange risk to understand the impact of the exchange rate movement on the Bank’s revenue and capital. The Bank’s foreign exchange
position is primarily US Dollar-denominated, most of the liabilities are in the form of third party funds and borrowing whilst most of the assets are in the form of loans, inter-bank placements and
marketable securities.
In order to manage and mitigate the foreign exchange risk, foreign currency loans and placements were funded mostly with the same currency and to hedge significant foreign exchange open
position, the Bank used derivative instruments such as FX forward, swap and option.
Bank Mandiri complied with Bank Indonesia’s regulation that requires the Net Open Position NOP in all foreign currencies for on balance sheet and aggregate to be no more than 20.00 of the
Bank’s Capital Tier I and Tier II. For prudential principles, the Bank has established internal limit to be no more than 10.00 of the capital. As at 31 December 2009, the Bank’s NOP was 9.09 and
NOP aggregate absolute was 3.44 from the capital Note 52.
Operational Risk Operational Risk is defined as the risk of loss resulting from inadequate or failed in internal processes,
people and systems or from external events. The Bank proactively implements operational risk management to protect the interests of the Bank’s stakeholders. An effective Operational Risk
Management ORM program will protect the customers’ interest, decrease incidence of operational losses, improve the Bank’s reputation and support the Bank in achieving its business goals. Currently, the
Bank conducts several programs for improving its operational risk management, as follows:
a. Operational Risk Mitigation
- The Bank continues to review its policy and adjust operational risk management procedures in
accordance to the latest developments. The Bank’s standard policy consists of Standard Operating Procedures SOP for Operational Risk Management, SOP for New Product or
Activities NPA, as well as the SOP for Business Continuity Plan BCP as a guide for effective implementation of Operational Risk Management in a holistic manner.
- To improve its Operational Risk management, the Bank conducts several ORM Tools
implementation to be deployed in all its business unit Mandiri Loss Event Database, Risk Control Self Assessment and Key Risk Indicators in order to help the Business units manage
their operational risk in its daily activities.
- To identify the Operational Risk, the Bank regularly reports its operational risk profile and
segregated by its business units, in order capture the magnitude of the Bank’s operational risk exposed by Bank’s and all business units.
PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2009, 2008 AND 2007
Expressed in millions of Rupiah, unless otherwise stated
Appendix 5141 56. RISK MANAGEMENT continued
Operational Risk continued
b. Capital Charge Calculation to Cover Operational Risk
